Edward Zelinsky (Cardozo) will will deliver the 2009 Dr. Arthur Grayson Distinguished Lecture on September 24 at the Southern Illinois University School of Law. His topic will be Reforming Health Care: The Conundrum of Cost.

Just ask the Littler Mendlesohn law firm who is now facing a lawsuit by a former receptionist (via ABA Journal via Above The Law):

A former receptionist in a suburban Washington, D.C., office of a national labor and employment boutique has sued her ex-employer over an alleged lack of bathroom breaks.

Plaintiff Rebecca Landrith contends in the D.C. Superior Court suit that the McLean, Va., office of Littler Mendelson had no formal policy or procedure about her bathroom breaks. It was so difficult to find someone to substitute for her while she took a break there, she alleges, that she twice "wet her pants" at the reception desk, reports the Washington Business Journal.

Two weeks after she complained about the lack of bathroom breaks to the firm's general counsel, she was fired, the suit contends.

Of course, these are only allegations, but all I can say is that I have worked at a number of law firms with labor and employment departments, and some of the crazy stuff that happens is just, well, crazy.

I also wonder what type of person would wet her pants twice rather than leave her work station. If there was no policy of bathroom breaks wouldn't the natural thing to do would be to use the bathroom when you had to? I am all for dedicated employees, but there are limits, you know.

Finally, I wonder who Littler uses for their labor and employment law work? Morgan Lewis?

In the spring of 2009, public outcry erupted over the multi-million dollar bonuses paid to AIG executives even as the company was receiving TARP funds. Various measures were proposed in response, including a 90% retroactive tax on the bonuses, which the media described as a "clawback." Separately, the term “clawback” was also used to refer to remedies potentially available to investors defrauded in the multi-billion dollar Ponzi scheme run by Bernard Madoff. While the media and legal commentators have used the term “clawback” reflexively, the concept has yet to be fully analyzed. In this article, we propose a doctrine of clawbacks that accounts for these seemingly variant usages. In the process, we distinguish between retroactive and prospective clawback provisions, and explore the implications of such provisions for contract law in general. Ultimately, we advocate writing prospective clawback terms into contracts directly, or implying them through default rules where possible, including via potential amendments to the law of securities regulation. We believe that such prospective clawbacks will result in more accountability for executive compensation, reduce inequities among investors in certain frauds, and overall have a salutary effect upon corporate governance.

Perhaps, "String Them from The Lamp Posts," would have been a better subtitle, but I can hardly think of a more timely and relevant topic than this one. And as long as we have greedy executives and Madoffs (which unfortunately we will), we do need a more refined clawbak doctrine. Good job, guys!

Mitch Rubinstein from Adjunct Law Prof Blog writes to us that, "this is a bit different, but I think readers may be interested in this posting about the Pope's encyclical supporting unions." Here's the post and a taste of Caritas in Veritate, issued on June 29, 2009:

While reflecting on the theme of work, it is appropriate to
recall how important it is that labour unions — which have always been
encouraged and supported by the Church — should be open to the new perspectives
that are emerging in the world of work. Looking to wider concerns than the
specific category of labour for which they were formed, union organizations are
called to address some of the new questions arising in our society: I am
thinking, for example, of the complex of issues that social scientists describe
in terms of a conflict between worker and consumer. Without necessarily
endorsing the thesis that the central focus on the worker has given way to a
central focus on the consumer, this would still appear to constitute new ground
for unions to explore creatively. The global context in which work takes place
also demands that national labour unions, which tend to limit themselves to
defending the interests of their registered members, should turn their
attention to those outside their membership, and in particular to workers in
developing countries where social rights are often violated. The protection of
these workers, partly achieved through appropriate initiatives aimed at their
countries of origin, will enable trade unions to demonstrate the authentic
ethical and cultural motivations that made it possible for them, in a different
social and labour context, to play a decisive role in development. The Church's
traditional teaching makes a valid distinction between the respective roles and
functions of trade unions and politics. This distinction allows unions to
identify civil society as the proper setting for their necessary activity of
defending and promoting labour, especially on behalf of exploited and
unrepresented workers, whose woeful condition is often ignored by the
distracted eye of society.

As a member of a Jesuit law school faculty, I am very proud that the Catholic Church has continued to take such a view on the value of unions and the need to protect historically exploited workers. I checked with my favorite Jesuit and he tells me this is at least the fifth in a series of encyclicals commentating on the importance of labor unions starting with Pope Leo XIII in the late 1800s.

Although the percentage of employees represented in collective bargaining in the public sector is more than five times the percentage in the private sector, collective bargaining for public employees remains very controversial The two most powerful arguments against public employee collective bargaining is that it is antidemocratic and that it impedes effective government. Concern with the antidemocratic effects of public sector collective bargaining leads courts and labor boards to narrow the scope of what must be negotiated. Concerns with collective bargaining impeding effective government leads to backlash by the legislative and executive branches against public employee unions.

This article contends that the narrowness of the scope of bargaining that results from concerns over the antidemocratic nature of public employee bargaining leads to public employee bargaining impeding effective government. The law of negotiability channels channels employees and their unions away from participation in and responsibility for decisions affecting the risks of the public sector enterprise and into negotiating contract provisions that protect them from those risks. Public employee unions have performed that role very effectively, so effectively that the results can impede effective government. The article examines numerous cases where, in spite of the law, public employers have involved employees and their unions in decisions affecting the risks of the enterprise with very positive results. The article urges that jurisdictions break away from the private sector model which classifies every subject as either one on which collective bargaining is mandated or which is left to the unilateral control of management and develop alternative vehicles of employee-union voice in public sector decision-making.

Mary Anne Moffa, Executive Director of the Peggy Browning Fund, has brought to our attention that this year's National Law Students Workers' Rights Conference will be held October 16-17, 2009,
in Silver Spring, Maryland.

Each year this conference brings together
law students, experts, and
practitioners from all over the nation to discuss workers' rights laws
in a thought-provoking, stimulating, educational environment. Here's a
conferenceBrochure and Registration Form. More information about the conference is available at The Peggy Browning Fund website.

Many of my labor and employment students have attended over the past years, and they have raved about the experience. Please let your students know about this opportunity. Some funding assistance is available.

Via Ross Runkel comes news that the Federal Agency Acquisition Council's new rule that requires federal contractors to use the E-Verify program to confirm that new and existing employees are eligible to work in the United States has survived a federal challenge. The rule, set to go into effect on September 8, was challenged by the U.S. Chamber of Commerce and other employer groups as violating the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA) and as exceeding the agency's authority and violating several other procurement acts. The District Court for the District of Maryland rejected all of the challenges.

IIRIRA prohibits that the Secretary of Homeland Security from requiring that anyone use a pilot program (like E-Verify) to establish eligibility of workers. Despite this language, the court found that the rule did not violate IIRIRA. First, it wasn't the Secretary who required that eligibility be checked by using a program, but the President (actually Presidents Clinton and Bush) who by executive order required use of a pilot program. Additionally, no one was required as an absolute matter to use the program. Companies that do not want to comply can simply decide not to do business with the federal government. Thus, they are not required to use the program. Sounds like the familiar spending clause analysis we see used to allow the federal government to exercise powers that it would otherwise not be able to.

The court also rejected all of the other challenges, essentially finding either that the complained-of acts were the President's and thus not limited by the various acts, or that the acts didn't prohibit the rule. I think--although feel free to correct me in the comments--that this was the only pending court challenge of the new rule and that although the effective date of the rule has been delayed several times, the current administration supports the rule and it will not be postponed again barring any new suits or stays granted.

Bulletin 08-1 concern[s] the legal obligations of employee benefit plan fiduciaries when they invest the plan assets they control. Specifically, IB 08-1 addresses plan fiduciaries’ duties in the context of “economically targeted investing,” the investment of plan assets in pursuit of benefits for third parties rather than for plan participants and their beneficiaries. IB 08-1 revises prior regulations on economically targeted investing issued early in the Clinton administration. . . . Economically targeted investing contravenes ERISA’s duty of loyalty by permitting, indeed encouraging, plan trustees to invest plan assets to generate ancillary benefits for persons other than the participants whose labor is embodied in those assets. IB 08-1 was thus a missed opportunity. Economically targeted investing is neither a coherent concept nor a concept compatible with ERISA’s duty of loyalty.

This isn't news for most readers, but the New York Times has an article on the recession's effect on recent law school graduates, even those from the elite law schools (hint: it's not good). Among the lowlights:

This fall, law students are competing for half as many openings at big
firms as they were last year in what is shaping up to be the most
wrenching job search season in over 50 years.

For students now, the promise of the big law firm career — and its
paychecks — is slipping through their fingers, forcing them to look at
lesser firms in smaller markets as well as opportunities in government
or with public interest groups, law school faculty and students say.

The frenzy has even pushed the nation’s top firms, a tradition-bound
coterie, into discussing how to reform the recruitment process with an
earnestness that would have been unthinkable just years ago. . . .

New York University,
Georgetown, Northwestern and other top universities confirm that
interviews are down by a third to a half compared with a year ago,
while lower-ranked schools are suffering more. What is more, when
interviews finish in a few weeks, even fewer offers will be extended,
said Howard L. Ellin, the chairman of global hiring at Skadden, Arps,because many firms are interviewing students for slots they may not fill. . . .

The Social Security Administration . . . said applications for lawyer positions and clerkships had
more than doubled this year, to 2,000, from 800. The public-interest
job fair at N.Y.U. this year was “packed to the gills,” [a student]
recalled, but whereas in past years students had seven or eight
interviews, some of his classmates this year had zero. “There’s a
humongous trickle-down effect,” he said. “When the big firms don’t
hire, everyone looks to government. And when those get filled up, then
what happens?” . . .

With the system’s frailties exposed by the recession, said Mr. Ellin
from Skadden, Arps, the time could be ripe for “massive overhaul.” Discussions at industry roundtables and casual talk among officials
at leading schools and firms suggest a consensus that interview dates
should be pushed back to the spring of the second year, if not the
third year. The recent problems have arisen, reform-minded critics say,
because the legal industry essentially hires two full years ahead of
when employees begin to work. And because young lawyers have to be
advanced by lockstep every year, it is difficult to make recruiting
changes that are responsive to shocks in business.

If the hiring process was actually reformed, that would be quite a silver lining to this situation. However, I do have one quibble with the article: the line about the economy "forcing" to look for government or public-interest jobs seems wrong. Although lower-paying, those jobs tend to be most in demand, even in the best of times. It's amazing how much people will give up in salary to do something they find more interesting (not to mention avoid having to worry about billable hours).

The Ninth Circuit, in USA v. Comprehensive Drug Testing--a 9-2 en banc decision authored by Judge Kozinski--has held that prosecutors improperly seized the results of a pilot baseball drug testing program to gauge the seriousness of steroid use. In 2003, MLB and the MLB players association conducted random drug testing that was supposed to remain anonymous, even to the players. As any sports fan knows, despite this anonymity pledge, several names have leaked out the past few years. The reason the list--which was to be destroyed--still exists is that federal prosecutors raided the testing company to find evidence about the truthfulness of several players' testimony about a drug supplier (BALCO). That raid also turned up results on about 100 other players--all of which the prosecutors kept.

The players union challenged the seizure, which the Ninth Circuit has no help was improper. The decision essentially said that prosecutors had no probable cause for seizing the results of the 100 players not involved in the investigation. The prosecutors were ordered to return the list. No word yet on whether prosecutors will seek cert.

The Eighth Circuit issued an important decision today in Sandoval v. American Building Maintenance Industries (Download Sandoval Opinion), a case involving sexual harassment at a company that provides janitorial services. The court's opinion clarified when a parent company will be considered an employer of the employees of a wholly owned subsidiary and what kinds of evidence can be used to demonstrate severity and pervasiveness of a hostile work environment and constructive notice to the employer.

The employees in this sexual harassment suit had been employed by the subsidiary, but some had sued the parent company and too late moved to amend to add the subsidiary. The district court had granted summary judgment, finding that there was insufficient evidence to show that the parent company was the employer, and for those employees who had sued the subsidiary, that there was insufficient evidence to demonstrate that the subsidiary had constructive notice of the hostile environment the plaintiffs were subjected to. There were other discrimination claims as well, but summary judgment was sustained for them with no additional analysis by the court of appeals, so I'll not deal with them here.

In deciding that the parent company was an employer, the court had to finesse its most recent decision on the matter. In Brown v. Fred’s, Inc., 494 F.3d 736, 739 (8th Cir. 2007), in which the panel applied "a strong presumption that a parent company is not the employer of its subsidiary's employees," relying on 4th and 10th circuit cases. The prior panel had held that Title VII plaintiff to the standard used by the 4th Circuit: "A parent company may employ its subsidiary's employees if (a) the parent company so dominates the subsidiary's operations that the two are one entity and therefore one employer, . . . or (b) the parent company is linked to the alleged discriminatory action because it controls individual employment decisions."

This panel reaffirmed that the circuit's prior 4-part test was the one to apply to determine when a parent dominates the the subsidiary's operations (the first part of the test above): 1) interrelation of operations, 2) common management, 3) centralized control of labor relations, and 4) common ownership or financial control. Using this test, the court found that there was substantial evidence that the parent company dominated the subsidiary, describing the interrelationship over three pages of the opinion. The factors that would show that domination focused primarily on common officers and ownership and centralized control of labor relations.

The court also made important new law in the sexual harassment claim. Part of a plaintiff's prima facie case for co-worker sexual harassment is that the harassment must have altered the working environment. This element involves both objective and subjective components. The harassment must be severe or pervasive enough to create an objectively hostile or abusive work environment, and the plaintiff must subjectively believe her working conditions have been altered. Additionally, in the Eighth Circuit, a plaintiff seeking to show that the employer is liable for coworker harassment must provide evidence to show that the employer knew or
should have known of the harassment and failed to take prompt remedial
action.

There was evidence presented of nearly 100 similar complaints of sexual harassment during the time that the plaintiffs were employed, which the district court had refused to consider because the plaintiffs had not been aware of them. The court of appeals held that this evidence had to be considered as evidence both that the harassment was objectively severe and pervasive enough to alter the plaintiffs' working conditions but also as evidence of constructive notice: that the harassment was so pervasive and open that a reasonable employer would have had to be aware of it.

On this last point, Judge Gruender dissented, stating "the Court ignores the fact that [this evidence included] numerous sexual harassment complaints concerning different victims and different employees at different locations. [The employer] has approximately 400 locations at which it provides janitorial services in Minnesota." These other actions, in the dissenting judge's view, could not put the employer on notice that these plaintiffs at this location would be subject to harassment.

On the heels of the cert. petition in the New Process case comes another petition addressing the validity of two-member NLRB decisions, this time in the First Circuit's Northeastern Land Services case (as reported by BNA's Daily Labor Report, subscription required). There is likely to be one or two more--all of which should at least catch the Supreme Court's attention. Whether the Court actually grants cert., especially that their are now nominees for all the Board seats, is unclear but it would sure be nice to have this issue resolved given that it could easily happen again.

Microsoft has today issued an apology after erasing a black man from a marketing page of the Polish version of its site. The apology came after [the company] pasted a white man’s head on to a black man’s body but left a black hand clearly in shot. The photo shoot was apparently doctored to appeal to Polish customers. The US firm, unsurpisingly have removed the image and w[as] quick to issue an apology.

The Employee Free Choice Act (EFCA) is arguably the most transformative piece of labor legislation to come before Congress since the enactment of the National Labor Relations Act of 1935 (NLRA). Putting the potential impact of the EFCA in historical perspective, one commentator contends that the NLRA marked the culmination of a systematic effort of the Progressive movement that dominated so much of American intellectual life during the first third of the twentieth century. As it was widely acknowledged at the time, the NLRA was revolutionary in its implications for American Labor Law. Less widely recognized were the adverse effects of this and other New Deal statutes on people of color. Readily available evidence shows that President Roosevelt’s insistence on raising the price of labor (1) increased unemployment and human suffering, and (2) also widened the unemployment gap between blacks and whites . . . .

One of the newest attempts to transform labor relations is the EFCA. The first to disappear under the EFCA would be a system of union democracy whereby unions could only obtain the rights of exclusive representation for firms if they could prevail in a secret-ballot election. Second, the EFCA would eliminate the necessity of a freely negotiated collective bargaining agreement between management and labor and instead substitute compulsory arbitration. While some labor union advocates contend that law ought to be conceived of as a vehicle to democratize the workplace by redistributing power in labor markets in favor of workers, while concurrently demolishing hierarchical command structures that entrench gender, race and class lines, this proposal would likely expand labor hierarchy, labor market cartelization and diminish the employment prospects of racial minorities. As such, the EFCA is marked by contradiction. This paper deploys Critical Race Reformist theory, economics and apartheid-era South African labor history in order to show that rather than embracing freedom for workers, eliminating poverty, and expanding opportunities for all, this proposal would likely invert such goals and instead operate consistently with the record of exclusion and subordination tied to American Progressivism and the labor movement.

Probably not a big surprise to many readers out there that female supervisors are still harassed in large numbers, but the fact that this study show that they are harassed more than non-supervisor female employees is just a little surprising to me (via MSNBC):

Female managers are 137 percent more likely to experience sexual harassment than their rank-and-file counterparts, according to a recently released study.

Even Heather McLaughlin, a sociologist at the University of Minnesota and the primary investigator on the study, was surprised by the findings.

“It’s sort of a paradox,” she says. “You would expect that having that status and power over other employees would protect you from that behavior.”

Turns out it doesn’t, and McLaughlin’s conclusion is that “because of gender norms, people are still not accepting women in power positions.”

The report, “A Longitudinal Analysis of Gender, Power and Sexual Harassment in Young Adulthood,” looked at data that tracked nearly 600 individuals from adolescents into their 30s.

Perhaps men are further aroused by women in power or more likely, enjoy the thrill of bringing a women in power down to their own base level. In any event, sexual harassment training, which traditionally separates out rank-and-file workers from supervisors, probably should be modified to take this new phenomenon into account.

As many have been discussing (including Joe Seiner (South Carolina)), the Supreme Court's Iqbal case is likely to have a big impact on employment cases. We're now seeing the beginning of such cases in federal appellate courts, in particular the Third Circuit's recent decision in Fowler v. UMPC Shadyside. That case involved a Rehabilitation Act claim that the court reviewed under the heightened Iqbal pleading standards. Although finding that the claim could have been more detailed, the court reversed the district court and held that it satisfied Iqbal. The plaintiff survived in this case, but expect more to go the other way soon (including this case I just learned about, as described by Paul Mollica).

In an interesting First Amendment retaliation claim forwarded to me by friend of the blog, Bill Herbert, the Second Circuit revisited the question of whether the employee's motive is dispositive in determining whether speech is on a matter of public concern (for those of you who were getting ready for me to lash out on Garcetti grounds for old time's sake, the district court actually found the employee was speaking as a citizen and thus had potential First Amendment protections).

In Sousa v. Roque, No. 07-1892 (2nd Cir. Aug. 21, 2009), the Second Circuit concluded that the employee's motive in speaking out is NOT dispositive on whether he spoke on a matter of public concern (the so-called Connick test and the second step in the public employee free speech five-step). The employee had been vocal about workplace violence issues and appeared to suffer various forms of retaliation for his pains. The court concluded:

Because our holding is at odds with the District Court’s conclusion that Sousa’s speech did not address a matter of public concern solely because he was motivated by employment grievances, we vacate the District Court’s order granting summary judgment to defendants on Sousa’s First Amendment claim . . . .

We note that this holding does not negate the fact that, as we stated in Lewis, “speech on apurely private matter, such as an employee’s dissatisfaction with the conditions of his employment, does not pertain to a matter of public concern.” Lewis, 165 F.3d at 164. An employee who complains solely about his own dissatisfaction with the conditions of his own employment is speaking “upon matters only of personal interest.” Connick, 461 U.S. at 147. We make clear today, however, that it does not follow that a person motivated by a personal grievance cannot be speaking on a matter of public concern . . . .

Whether or not speech addresses a matter of public concern “must be determined by the content, form, and context of a given statement, as revealed by the whole record,” Connick, 461 U.S. at 147-48, and while motive surely may be one factor in making this determination, it is not, standing alone, dispositive or conclusive.

It won't surprise anyone that I find Judge Cabranes' opinion for the majority persuasive. This area of First Amendment law is riven with formalized distinctions between talking as an employee vs. talking as an citizen and between speaking on matters of purely private interest and on matters of public concern. It is great to see the Second Circuit take a more nuanced approach that recognizes that even public employee complaints motivated by an employee grievance may also still touch on matters of crucial public concern - like the potential for workplace violence.